FINANCIAL EDUCATION
CIPD guide on workplace financial education
Companies invest a large amount of money each year on benefits packages but this could be being wasted if employees do not fully understand the value of what is being offered to them. This is one of the concerns raised by a recent guide looking at workplace financial education from the Chartered Institute of Personnel and Development and Financial Services Authority (FSA).
According to the report, educating employees about financial matters can produce a win-win situation for both employers and individuals. As well as enabling staff to better appreciate and value the increasingly complex set of benefits they receive, workplace financial education will help them make the choices that best suit their own personal circumstances.
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The resulting easing of financial concerns could lead to reduced absenteeism and better performance with employees also more likely to understand the business pressures faced by their employer.
Key survey results
As part of the report, the CIPD carried out a survey to determine the extent of workplace financial education in the UK and found that:
23% of companies offer financial education and/or some other financial advice to their employees.
The most popular approach is to offer free independent financial advice, followed by financial education.
Most commonly, elements advised on are pensions, retirement, savings and investments and mortgages.
Just over 60% of those offering financial education use one-to-one sessions while around 40% have either group seminars or printed literature.
Only three-fifths of companies assess the effectiveness of their programmes, usually via employee feedback.
Checklist – introducing a financial education programme
The report also examines eight case studies illustrating how companies are putting into practice financial education policies and draws up a set of recommendations and the following checklist:
Establish the business case for financial education, for example, a low take-up rate of benefits.
Determine whether there is an employee need for it.
Start planning the programme by establishing a project team, budget and availability of resources.
Determine the objectives of the programme and how to measure their success.
Design the programme bearing in mind its scope, content, method of delivery and audience.
Test the programme using focus or other sub groups.
Before rolling out the programme, ensure employee buy-in with effective communication and sufficient opportunity for staff to question its objectives etc.
Evaluate the programme via employee feedback.
Take the programme forward once the necessary changes have been made following feedback.
Regularly review the programme to check it continues to meet its objectives and consider extending it in the future.
A final word
“I am not suggesting that it’s appropriate for all organisations to offer workplace financial education, but for those that it is, it can be a real win-win, delivering benefits both to business and to individuals - as this guide shows.” - Charles Cotton, CIPD reward adviser.
Want to know more?
Title: Workplace Financial Education, A Win-Win Proposition, Chartered Institute of Personnel and Development, December 2006.
Methodology: Questionnaires were sent to reward specialists and people managers in the private, public and voluntary sectors in late 2006 while the CIPD carried out eight additional in-depth case studies.
Sample size: Completed questionnaires were received from 466 organisations employing around 1 million employees.
Availability: To download the 45-page report, free of charge, in PDF format visit the “Pay and reward” section of the Chartered Institute’s site at www.cipd.co.uk and choose the heading “General” on the left of the page. Or you can jump to www.cipd.co.uk/subjects/pay/general/_wrkplfined.htm?IsSrchRes=1
The Chartered Institute of Personnel and Development (CIPD) is the professional body for those involved in the management and development of people and has over 127,000 individual members. To find out more visit www.cipd.co.uk